5 Clever Ways to Make Homebuying Less Stressful
“Buying a home was really easy!”
Said no one ever.
The sheer volume of information to be absorbed, coupled with the under-the-fingernails level of scrutiny lenders subject homebuyers to, are enough to drive even the coolest cucumber a little crazy.
If you’ve ever experienced home-buying anxiety, you’re not alone. In fact, about 40% of consumers say buying a new home is the most stressful event in modern life, according to a recent survey of 2,000 Americans by Homes.com.
What’s even sadder: about one in every three of the homebuyers surveyed said they were reduced to tears at some point in the process.
Stress does more than just make buying a new home unpleasant: it can frustrate buyers into making bad decisions that can eventually land them in over their heads financially or in a house they don’t truly love.
How do you prevent that from happening to you? As in any field of combat, the best defense is a good offense.
Here are 5 things you can do to prepare:
Learn the process.
Are you aware how closing costs work? Do you know what title insurance is? Can you explain what private mortgage insurance is for? Most people who have never purchased a home have very little insight into how it all works.
Start your home buying journey by reading as much as you can about what happens, how and when it happens, and who does what (and pays for what) during the transaction.
Make sure you fully understand the process before you jump in and start signing the next 30 years of your life away. The more you know, the more confident you will be when it comes time to make important decisions.
Before you even think about perusing real estate listings, you need to determine what’s realistic to spend on your new home. The best way to do this is by getting a mortgage pre-approval from a lender.
· Allow you to learn about loan options
· Uncover potential problems during the credit check
· Determine how much you can borrow
· Provide proof that you can obtain financing to sellers
Because being pre-approved means the lender has checked your credit, income, and assets, and verified your employment and documentation, it’s the best way to nip any potential problems in the bud.
Know the difference between “approved for” and “able to afford.”
It’s important to remember that a mortgage pre-approval tells you how much you can borrow — not what you can comfortably afford.
To get an idea of that number, use an online calculator to estimate what your mortgage payments may look like. Keep in mind that these tools often assume a 20% down payment and usually do not include taxes or insurance in their calculations. Next, outline your monthly expenses including home maintenance, upgrades, and repair costs — and don’t forget to factor savings like retirement and college funds into your budget.
If that total is higher than your current monthly expenses, try living within your potential future budget for a few months. If you can’t save the difference each month for a few consecutive months, you should take out a smaller mortgage.
Be realistic about your offer.
Your realtor can guide you through making an offer, but this is a part of the buying process you should fully understand on your own.
Everybody wants to offer low and ask for concessions, but don’t forget that a good deal means that both sides walk away happy with the transaction. The more reasonable the offer, the more likely the seller is to accept.
If you’re in a seller’s market, you’ve got less time to make decisions and less leverage to make a conditional offer or argue over small-ticket home inspection items. You may also have to compete with multiple bids.
Learn as much as you can about the current forces shaping your real estate market and let your knowledge — rather than your emotions — determine your negotiating strategy.
Consolidate your cash.
If you keep cash in a few different accounts, or if you will be receiving a gift or using a tax refund to help with the down payment, consolidate everything into one separate account at least 2 months before applying for a loan.
This is called “seasoning” your cash and it will save you the headache of transferring money between accounts and the anxiety of waiting for funds to clear in time.
Your loan officer will ask for at least your last 2 bank statements, and when the money has been there for that long it shows that it is truly yours. Moving cash around at the last minute can put your loan approval at risk (not to mention stress you out).
Homebuying anxiety is natural, but it doesn’t have to spoil your experience. By arming yourself with all the information you can, preparing your budget and finances, and being realistic about your expectations, you can sail through the process with your sanity in tact.
The Noodigs software platform empowers home buyers and sellers to manage their own transaction, saving them thousands on realtor fees. With step-by-step process guidance and a personalized digital experience from listing to closing for 1/4 the cost of the traditional model, we’re bridging the gap between comprehensiveness and cost effectiveness.